PayPal's CEO sees the phone transforming commerce

For PayPal, the future of commerce is already here -- in the palm of your hand.

Phones are changing the way we shop, and as such are changing the retail landscape, PayPal CEO Dan Schulman said Tuesday during an onstage interview at The Wall Street Journal's WSJDLive global technology conference in Laguna Beach, California.

"Mobile is blurring the distinction between online and in-store," Schulman said. "In the not-too-distant future, commerce is just going to be commerce. It won't be online commerce or offline commerce. It's just going to be commerce. And that will happen because of the phone."

PayPal, the digital-payments unit spun off from eBay last year, has been ramping up its efforts in mobile payments as it competes against the likes of Apple Pay, Google's Android Pay, Samsung Pay and Microsoft Wallet. And the market is taking off. eMarketer reports that the amount of mobile payments is expected to triple this year, to $27 billion.

That evolution will open up "a tremendous amount" of opportunities for the digital-payments business, Schulman said. But it also represents challenges for retailers, he warned.

"The big problem retailers are facing is the world is moving to mobile," Schulman said. "But the problem with mobile is because the screen size is so small, the conversion [sales completion] rate drops off dramatically versus a bigger screen. And that's really worrisome for retailers because more people are using their mobile phones to shop, and cart abandonment is very high."

To solve that, Schulman said, PayPal used risk algorithms to create One Touch, a feature that makes it easier to pay on your phone or online without having to constantly punch in your log-in information. Schulman said the feature has improved the conversion rate to 87 percent -- "two times the nearest competitor."

"Payments is a hard business," he said. "It's a messy business, with not necessarily the largest of margins."